4.3 - FDI

Question 1

How does FDI promotion encourage development?

Answer 1

Drives AD + real growth

Question 2

What are the main benefits of attracting FDI flows?

Answer 2

Improved infrastructure
Capital Intensity
Training - Productivity
Per capita income + household savings
Market competition
Investment grows export capacity

Question 3

What is capital intensity?

Answer 3

Increasing capital per worker
Improves productivity

Question 4

What are the main drawbacks of attracting FDI flows?

Answer 4

Multinationals
Profit repatriation
Imports + trade balance

Question 5

What is profit repatriation?

Answer 5

Firm sends foreign earned profits/assets back home

Question 6

What are the drawbacks of multinationals?

Answer 6

Manipulate laws + regs
Anti-competitive practice
Environmental degredation
Worker conditions
Employ locals in low skill labour

Question 7

Which policies are designed to attract FDI?

Answer 7

Corporation tax
Special Economic Zone creation
Trade + Investment Agreements
Critical infrastructure
Flexible + skilled labour force